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| | | The Board of Directors (our “Board”) of Cherry Hill Mortgage Investment Corporation, a Maryland corporation (“we,” “our,” “us” or “our company”), has made these materials available to you in connection with its solicitation of proxies for its Annual Meeting of Stockholders to be held on June 16, 2022, at 8:00 a.m., Eastern Time, and any adjournment or postponement thereof. Due to the continuing public heath impact of the COVID-19 pandemic and to support the health and well-being of our stockholders and our community, the 2022 Annual Meeting of Stockholders (the “Annual Meeting”) will be held over the web in a virtual meeting format only. You will not be able to attend the Annual Meeting in person.1 |
All stockholders will have the ability to access our proxy materials at www.edocumentview.com/CHMI.
In addition to solicitation through the Internet or by mail, certain of our directors and officers may solicit proxies by telephone, personal contact or other means of communication. They will not receive any additional compensation for these activities. In addition, brokers, banks and other persons holding common stock on behalf of beneficial owners will be requested to solicit proxies or authorizations from beneficial owners. We will bear all costs incurred in connection with the preparation, assembly and furnishing of our proxy materials and the solicitation of proxies and will reimburse brokers, banks and other nominees, fiduciaries and custodians for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of our common stock. Although no proxy solicitor has been engaged at this time, we may determine it is necessary to employ an outside firm to assist in the solicitation process. If so, we will pay the proxy solicitor reasonable and customary fees.
No person is authorized to give any information or to make any representation not contained in this Proxy Statement and, if given or made, you should not rely on that information or representation as having been authorized by us. The information contained in this Proxy Statement is accurate only as of the date of this Proxy Statement.
The mailing address of our principal executive office is 1451 Route 34, Suite 303, Farmingdale, New Jersey 07727, and our main telephone number is (877) 870-7005. We maintain an Internet website at www.chmireit.com. Information at or connected to our website is not and should not be considered part of this Proxy Statement.
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| | | You are being asked to vote on the following proposals:2 |
election to the Board of the four director nominees named in this Proxy Statement (Proposal No. 1);
approval, on a non-binding advisory basis, of the compensation of our named executive officers for the year ended December 31, 2021 (the “Say-on-Pay Proposal”) (Proposal No. 2); and
ratification of the appointment of Ernst & Young LLP (“EY”) as our independent registered public accounting firm for the fiscal year ending December 31, 2022 (Proposal No. 3).
| | | Holders of our common stock as of the close of business on the record date, April 8, 2022, are entitled to vote, either online or by proxy, at the virtual Annual Meeting. Each share of our common stock has one vote.2 |
| | | Due to the continuing public heath impact of the COVID-19 pandemic and to support the health and well-being of our stockholders and our community,2 |
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By Proxy—Beforevote at the Annual Meeting, you can give a proxy to vote your shares in one of the following ways:Meeting?
using the telephone or Internet voting procedures described on the accompanying proxy card; or
by completing and signing your proxy card and mailing it in time to be received prior to the Annual Meeting.
You may vote your shares during the virtual Annual Meeting until such time as the chairman declares the polls closed by visiting meetnow.global/MTFRHFG and following the instructions. To login to the virtual meeting you will be required to have a control number.
If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to participate in the virtual Annual Meeting. To register, you must submit proof of your proxy power (legal proxy) reflecting your Cherry Hill Mortgage Investment Corporation holdings along with your name and email address to Computershare Trust Company, N.A., our transfer agent (“Computershare”). Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on June 13, 2022. You will receive a confirmation email from Computershare of your registration.
Requests for registration should be directed to Computershare by forwarding the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com.
The telephone and Internet voting procedures are designed to confirm your identity, to allow you to give your voting instructions and to verify that your instructions have been properly recorded. If you wish to vote by telephone or Internet, please follow the instructions that are included on the accompanying proxy card. If you mail us your properly completed and signed proxy card, or vote by telephone or Internet, your shares will be voted according to the choices that you specify.
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If you submit a signed proxy without marking any choices, your proxy will be voted:
FOR the election of all director nominees named in this Proxy Statement;
FOR the approval, on a non-binding advisory basis, of the compensation paid to our named executive officers for the year ended December 31, 2021; and
FOR the ratification of the appointment of EY as our registered independent public accounting firm for the fiscal year ending December 31, 2022.
We do not expect any other matters to be brought before the virtual Annual Meeting. However, by giving your proxy, you appoint the persons named as proxies as your representatives at the virtual Annual Meeting. If any matter requiring a stockholder vote is properly presented at the virtual Annual Meeting and that matter is not described in our proxy materials, the proxy holders will vote your shares in accordance with their best judgment.
| | | Yes. You may change your vote or revoke your proxy at any time prior to the virtual Annual Meeting by:4 |
notifying our Secretary in writing at 1451 Route 34, Suite 303, Farmingdale, New Jersey 07727, that you are revoking your proxy;
executing or authorizing, dating and delivering to us a new proxy that is dated after the proxy you wish to revoke; or
participating in the virtual Annual Meeting and voting online during the virtual Annual Meeting.
| | | It depends on whether you hold your shares in your own name or in street name. If you hold your shares directly in your own name, they will not be voted unless you provide a proxy or vote online during the virtual Annual Meeting.4 |
Brokerage firms generally have the authority to vote customers’ un-voted shares on certain “routine” matters. If your shares are held in street name by a brokerage firm, the brokerage firm can vote your shares for the ratification of the appointment of EY as our registered independent public accounting firm for the fiscal year ending December 31, 2022 (Proposal No. 3) if you do not timely provide your voting instructions, because this matter is considered “routine” under the applicable rules. The other items (Proposals Nos. 1 and 2) are considered “non-routine,” and the brokerage firm cannot vote your shares without your specific voting instruction.
| | | As of the record date, a total of 18,890,716 shares of our common stock were issued and outstanding and entitled to vote at the virtual Annual Meeting. In order to conduct the virtual Annual Meeting, a majority of the shares entitled to vote must be in attendance on line at the virtual Annual Meeting or represented by proxy. This is referred to as a “quorum.” If you submit a properly executed proxy card or vote by telephone or on the Internet, you will be considered part of the quorum. Abstentions and broker non-votes will be counted as present and entitled to vote for purposes of determining a quorum. If a quorum is not present, the virtual Annual Meeting may be adjourned or postponed from time to time until a quorum is obtained, to a date not more than 120 days after the original record date without notice other than announcement during the virtual Annual Meeting. A broker non-vote occurs when a nominee who holds shares in street name has not received voting instructions from the beneficial owner of the shares and either chooses not to vote those shares on a routine matter or is not permitted to vote those shares on a non-routine matter.4 |
Election of Directors (Proposal No. 1). Directors are elected by a plurality of the votes cast at the virtual Annual Meeting. “Plurality” means that the nominees receiving the largest number of votes cast are elected as directors up to the maximum number of directors to be chosen at the virtual Annual Meeting. For purposes of this vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote for this proposal.
| | | 4Say-on-Pay (Proposal No. 2). The affirmative vote of a majority of the votes cast at the virtual Annual Meeting is required to approve the Say-on-Pay Proposal. For purposes of this vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote for this proposal.
Ratification of Appointment of EY (Proposal No. 3). The affirmative vote of a majority of the votes cast at the virtual Annual Meeting is required to approve this proposal. For purposes of this vote, abstentions will not be counted as votes cast and will have no effect on the result of the vote for this proposal. Because this matter is considered “routine” under applicable rules, we do not expect there to be any broker non-votes on this proposal.
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PROPOSAL NO. 1: ELECTION OF DIRECTORS | | | Our Board has fixed the number of directors at four. The four persons named below (each, a “director nominee”) currently serve on our Board and have been recommended by our Nominating and Corporate Governance Committee and nominated by our Board to serve on our Board until our 2023 Annual Meeting of Stockholders and until their respective successors are elected and qualified.
Our Board has no reason to believe that any of the director nominees will be unable, or will decline, to serve if elected. If any director nominee is unable to stand for election, the persons appointed to vote your proxy may vote at the virtual Annual Meeting for another candidate proposed by our Board, or our Board may choose to reduce the size of our Board, provided that we continue to have a majority of independent directors following any such reduction. In addition, our Board has determined that all of the director nominees, other than Mr. Lown, are independent under applicable rules of the U. S. Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”).
The following table sets forth the name, position with our Company and age at the virtual Annual Meeting of each director nominee:
Jeffrey B. Lown II
| | | President and Chief Executive Officer
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| Robert C. Mercer, Jr.
| | | Independent Director
| | | 74
| Joseph P. Murin
| | | Independent Director
| | | 72
| Regina M. Lowrie
| | | Independent Director
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We believe that all of the director nominees are intelligent, experienced and proactive with respect to management and risk oversight, and that they exercise good judgment. The biographical descriptions below set forth certain information with respect to each director nominee, including the experience, qualifications, attributes or skills of each director nominee that led us to conclude that such person should serve as a director.
Jeffrey B. Lown II has served as our President and as a director since the completion of our initial public offering in October 2013 and as our Chief Executive Officer since March 2017. Mr. Lown also served as our Chief Investment Officer through March 2016, at which time Julian Evans was appointed as Chief Investment Officer. Mr. Lown has over 25 years of combined experience in the financial services industry and the residential mortgage markets. Mr. Lown joined Freedom Mortgage Corporation (“Freedom Mortgage”) in April 2012 and served as Executive Vice President in charge of strategic funding projects and capital markets until July 2016, at which time he began to focus his full-time efforts on us and the management of our business. Prior to joining Freedom Mortgage, Mr. Lown served as a Portfolio Manager at Avenue Capital Group from April 2011 to January 2012. Prior to co-founding and serving as a principal of Green Lake Investment Partners, LLC in the fall of 2010, Mr. Lown spent 11 months at New Oak Capital LLC as head of the residential mortgage loan business and as a member of the bank advisory group. Prior to joining New Oak Capital, Mr. Lown was a fellow at the Office of Thrift Supervision (the “OTS”), from March 2008 through September 2009. At the OTS, he served as an advisor to the Senior Deputy Director’s office and focused on residential mortgage loan origination and residential asset valuation and RMBS. Noteworthy assignments included participating in the creation of the Obama administration’s “Making Home Affordable” modification program, the review of TARP Capital Purchase Program applications for OTS thrifts and working with the Acting Deputy Director of Examinations, Supervision, and Consumer Protection and regional staff on troubled institutions.NomineesBefore OTS, from April 2002 to March 2008, Mr. Lown worked at UBS Securities LLC in mortgage trading. While at UBS Securities, Mr. Lown managed an internal mortgage origination platform specializing in Alt-A mortgage loans, overseeing all units within the organization, including sales, capital markets and operations. Mr. Lown began his career at Salomon Brothers (now Citigroup) in 1991, where he spent 11 years working for the mortgage trading desk. The last six years at Citigroup were in the Mortgage Finance Group where Mr. Lown held several positions both in investment banking and mortgage finance roles. While serving in these positions, he developed strong credit, contract finance and securitization skills.
As a consequence of Mr. Lown’s more than 20 years’ experience in the residential mortgage markets, our Board, upon the recommendation of our Nominating and Corporate Governance Committee, believes that he is well qualified to provide valuable advice in many important areas and that he should serve as a director.
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Robert C. Mercer, Jr. has served as a director, chairman of our Audit Committee and member of our Compensation Committee and Nominating and Corporate Governance Committee since March 15, 2017. Mr. Mercer has over 40 years of management and executive experience in generating and servicing consumer loans and mortgages. From July 2009 to March 2017, Mr. Mercer served as a Senior Examiner/Subject Matter Expert —Credit Risk, Operations and Counterparty Management at the Federal Housing Finance Agency (“FHFA”) in Washington, D.C. At FHFA, Mr. Mercer monitored Freddie Mac’s seller/servicer and mortgage insurance counterparty risk analysis focusing on concentration of risk, regulatory risk and servicing transfer approvals. He also monitored Freddie Mac’s credit loss forecasting and loan loss reserve adequacy for its single family and multifamily loan portfolios.
Prior to his work at FHFA, Mr. Mercer’s experience includes managing problem portfolio workouts, managing due diligence processes involving mergers and acquisitions, purchasing mortgage portfolios and developing or enhancing profit and risk models to improve portfolio predictability and profitability. In addition to his operational experience, he also has an extensive credit risk background, having been Chief Credit Officer of Citicorp National Services. Mr. Mercer has been involved in all aspects of credit risk management, including the development of proprietary score cards.
As President of American Equity Mortgage, Inc. in St. Louis, Missouri, Mr. Mercer was responsible for expanding the retail branch network and improving operational efficiencies. Mr. Mercer has held senior executive and management positions in consumer lending at a series of financial institutions that ultimately became part of National City Bank, including Equibank, Integra Bank and Altegra Credit Company. Prior to that, Mr. Mercer held positions at Citicorp and Valley National Bank in Phoenix, Arizona after beginning his career spending thirteen-years at Ford Motor Credit Company.
Mr. Mercer brings to our Board over 40 years of experience in the consumer lending and mortgage industry sectors. Due to the depth and extent of his financial and credit risk management experience, our Board, upon the recommendation of our Nominating and Corporate Governance Committee, believes that he should serve as a director.
Joseph Murin has served as a director, chairman of our Nominating and Corporate Governance Committee and member of our Audit Committee and Compensation Committee since the completion of our initial public offering in October 2013. Since September 2009, Mr. Murin has served as the Chairman of The Collingwood Group LLC, a Washington, D.C.-based strategic investment and advisory firm serving the financial services industry that he cofounded in 2009. Since September 2012, Mr. Murin has served as President of New Day Financial LLC, a mortgage lender that provides homeowners with FHA, VA and reverse mortgage loans, and as Chairman of the Board of Directors of Chrysalis Holdings, LLC, a private investment firm focused on building and growing successful businesses that provide home financing, data analytics and technology solutions in the mortgage banking and financial services industries. From October 2001 to October 2007, Mr. Murin served, and since December 2009, he has served, as a director of the Point Park University. From July 2011 to August 2012, Mr. Murin served as the Chief Executive Officer of National Real Estate Information Services, a portfolio company owned by funds managed by affiliates of Fortress Investment Group, LLC.President George W. Bush nominated Mr. Murin in October 2007 to serve as President of Ginnie Mae, a position which he held from July 2008 to August 2009. He also served as a consultant to the White House until he was confirmed by the U.S. Senate from January 2008 until May 2008. Prior to his nomination to serve as President of Ginnie Mae, Mr. Murin was with HUD for two years, to which he brought more than 40 years of diverse experience in the financial services, mortgage and banking industries. This experience includes having served as the Chief Executive Officer of a number of financial organizations such as Century Mortgage Co. from September 1986 to January 1989, Lender’s Service Inc. from May 1991 to December 2001, and Mortgage Settlement Network Innovations from September 2004 to August 2007. Mr. Murin served as a director for iGATE Corporation (NASDAQ: IGTE) from August 2009 to April 2013. Mr. Murin holds a bachelor’s degree in business from National Louis University.
As a consequence of Mr. Murin’s more than 40 years’ experience in the financial services, mortgage and banking industries, including his service as President of Ginnie Mae, our Board, upon the recommendation of our Nominating and Corporate Governance Committee, believes that he is well qualified to provide valuable advice to our Board in many important areas and that he should serve as a director.
| | | 8Regina Lowrie has served as a director, chairman of our Compensation Committee and member of our Audit Committee and Nominating and Corporate Governance Committee since the 2015 Annual Meeting and is independent in accordance with applicable NYSE and SEC rules. With more than 30 years of experience in the financial services industry, Ms. Lowrie’s background includes senior management positions in sales, operations, acquisitions and investments, enterprise risk management, regulatory oversight, policies, and procedures. She is a Certified Mortgage Banker (CMB) and holds the distinction of being the first woman Chairman of the National Mortgage Bankers Association in the organization’s 94-year history. Ms. Lowrie also was the first woman to lead the local chapter of the Philadelphia Mortgage Bankers Association.
Ms. Lowrie is the founder, President and Chief Executive Officer of Dytrix, Incorporated. Dytrix is a financial technology company that enables secure financial transactions for institutions through the Dytrix Platform which includes wire/ACH transfer validation and closing agent management. Ms. Lowrie is also the founder, President and Chief Executive Officer of RML Advisors, headquartered in Blue Bell, Pennsylvania. RML Advisors’ charter is to serve the financial services industry as an advisor and consultant providing a broad range of services to assist clients in developing a blueprint for success in a volatile market with numerous regulatory challenges. RML Advisors also specializes in helping mortgage banking clients analyze various enterprise risks including compliance risks associated with service providers. From 2007 to 2013, Ms. Lowrie was the President of Vision Mortgage Capital, a division of Continental Bank, and Senior Vice President of Continental Bank. She was responsible for creating, developing, directing, and managing all aspects of the mortgage division, including strategic planning, enterprise risk management, quality control, compliance, secondary marketing and sales operations and budgeting process.
From 1994 to 2006, Ms. Lowrie was the President and Chief Executive Officer of Gateway Funding Diversified Mortgage Services, located in Horsham, Pennsylvania. At the time Gateway Funding was sold in 2006, Gateway Funding had grown to 800 employees with 57 branch offices and had a loan production of $3.5 billion with revenues of over $100 million. Prior to 1994, Ms. Lowrie held executive and senior management positions at Commonwealth Federal Savings and Loan and subsequently Comnet Mortgage Services.
Based on Ms. Lowrie’s more than 30 years of experience in all aspects of the residential mortgage business, our Board, upon the recommendation of our Nominating and Corporate Governance Committee, believes that she should serve as a director.
Our Board recommends that you vote “FOR” the election of each director nominee named above
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CORPORATE GOVERNANCE
Our Board believes that the combination of its current composition, leadership structure and the intelligent, experienced and diverse perspectives of the directors provides the proper independent and expert oversight of our company’s business, strategy and management. Some of the governance and leadership highlights include the following:
annual election of each director for a one-year term;
each stockholder is entitled to one vote per share;
a strong independent leadership structure with a Lead Independent Director;Director
| | | diversified board composition with more than 90 years of collective experience in mortgage finance;8 |
| | | board committees consist solely of independent directors;8 |
75% of the board is independent; and
regular, annual performance evaluations of the directors.
Our Board of Directors
Our business is managed by Cherry Hill Mortgage Management, LLC (the “Manager”), subject to the oversight and direction of our Board. Our Manager is an SEC-registered investment adviser and is responsible for administering our business activities and day-to-day operations. The directors are informed about our business at meetings of our Board and its committees and through supplemental reports and communications.
Our Board has established three standing committees that are comprised solely of independent directors, the principal functions of which are briefly described below. Matters put to a vote at any one of our three committees must be approved by a majority of the directors on the committee who are present at a meeting at which there is a quorum or by unanimous written consent of the directors on that committee.
Lead Independent Director
Mr. Murin, the chairman of our Nominating and Corporate Governance Committee, serves as the lead independent director. The lead independent director generally is the point of contact for persons desiring to communicate directly with the independent directors. All interested parties may do so by using the IR Contact tab under the Investor Relations section on our website, which is www.chmireit.com, and leaving a message.
Director Independence
Our Board has determined, after taking into account all facts and circumstances, that there are no material transactions, relationships or arrangements between us and Mr. Mercer, Mr. Murin or Ms. Lowrie requiring disclosure under applicable SEC rules and regulations or otherwise and that each of them is independent in accordance with applicable NYSE rules.
Corporate Governance Guidelines
Our Board has adopted Corporate Governance Guidelines, which provide the framework for our governance and represent our Board’s current views with respect to selected corporate governance issues considered to be of significance to our stockholders.
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| | | Our Board has established a Code of Business Conduct9 |
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Our Board has adopted a policy prohibiting all of the directors, officers and employees and certain “related persons” (as defined in the policy) of such persons of our company and its subsidiaries and affiliates from engaging in hedging or monetization transactions and other speculative transactions involving our company’s securities.Political Activity | | | Under the policy, a covered person may not, directly or indirectly, engage in any kind of hedging or monetization transaction against future declines in the market value of any equity-based securities of our company that could reduce or limit such person’s economic risk with respect to holdings, ownership or interest in or to our common stock or other securities of our company, including without limitation outstanding stock options, restricted stock, LTIP Units (as defined below) or other compensation awards the value of which are derived from, referenced to or based on the value or market price of our common stock or other securities of our company. Pursuant to the policy, a “short sale,” or sale of securities that the seller does not own at the time of sale or, if owned, that will not be delivered within 20 days of the sale, is an example of a prohibited hedging transaction. Prohibited transactions under the policy also include the purchase by a covered person of financial instruments, including, without limitation, prepaid variable forward contracts, equity swaps, collars, puts, calls, exchange funds, or other derivative securities that are designed to hedge or offset a decrease in market value of equity securities of our company. The policy does not, however, restrict holding, exercising, or settling awards such as options, restricted stock, restricted stock units, deferred stock units, LTIP Units, or other derivative securities granted under our company’s equity incentive plans.9 |
Persons who violate our anti-hedging policy may be subject to disciplinary action by our company. Such disciplinary action may include, but is not limited to, termination of employment and/or restrictions on future participation in incentive plans.
| | | Stockholders may view our corporate governance materials, including10 |
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